Press Briefing by Deputy National Security Advisor Jim Steinberg, National Security Council, Ken Lieberthal, and Deputy National Economic Advisor Lael Brainard

The Briefing Room

12:55 P.M. EDT

MR. LEAVY: As you know, the President is going to meet with Premier Zhu tomorrow. He spoke today at the Mayflower Hotel. To give you a little briefing and overview on the visit tomorrow is the President's Deputy National Security Advisor James Brady Steinberg. He'll talk about the broad overview of the relationship. Ken Lieberthal, Senior Director for Asian Affairs at the National Security Council, will talk about the nuts and bolts of the visit. And Lael Brainard, Deputy National Economic Advisor, will talk about the economic dimensions of the relationship and the visit tomorrow. They'll take your questions.

MR. STEINBERG: I am largely here in the master of ceremonies role, because we have the real experts that are going to brief you on this. And you also have the benefit of having had the President who gave a very important speech today, laying out our overall approach to China. So I don't have a great deal to add, except to reinforce the point that we see this visit of Premier Zhu as part of an effort that we've launched over the last several years for regular, sustained high-level dialogue between the United States and China.

The President has met with the Chinese leaders on a number of occasions, both in connection with other international meetings like the APEC meetings and at the U.N., as well as the two summits that we've had in the last year and a half, and now the meeting with Premier Zhu.

We think it's very important that these meetings do take place regularly. They can be an occasion for progress on specific issues, but perhaps more important, they're an opportunity for dialogue in which we can explore areas of common interest and also work on areas of difference. And this visit will fall very much into that pattern. We expect that the full range of issues will be discussed.

Obviously, given his portfolio, Premier Zhu has a particular role on economic issues, but I do expect that the President and Premier Zhu will talk about the full range of our relationship; talk about the progress that we're making on nonproliferation, which has been a very important priority for us in making progress in terms of China's activities; working together on the Korean Peninsula and on South Asia, where we have very important interests in common, as well as our work together at the U.N. and on what we call "the new security issues," like drugs and crime.

Lael will talk to you about our economic and trade issues that we'll be discussing here and the President, as always, will raise and discuss issues such as human rights, where we are concerned about recent crackdowns by the Chinese government, particularly on organized political dissent. And the President will stress the fact that we continue to believe that China needs to make progress in this area and that China's own self-interest would be served by granting greater political freedom to its people. I'm sure they'll touch on Tibet as well.

And we'll also have -- an important component of this visit will focus on the environment. As you know, the Vice President will cohost with Premier Zhu the second session of the forum on the environment and development, particularly with a focus on clean energy use and cooperation on climate change. So it will be a full and rich agenda, and you'll hear more about it when it's all over.

Let me turn it over to Ken.

MR. LIEBERTHAL: Thank you, Jim. As Jim mentioned, this is a visit that really should be seen in the context of a series of high-level meetings, the third in that series; the first two being summits between President Clinton and President Jiang Zemin. That really reflects the effort by both leaders, or by the leaders of both countries to gain a better mutual understanding of each other and how each of them understands the problems that both of us confront. And that's really, to my mind, the fundamental importance of this visit and of subsequent meetings that we will see between leaders of both countries.

Zhu arrived here yesterday in Los Angeles. His itinerary brings him to Washington later today. He will leave here on the 10th and go to Denver; from Denver to Chicago, Chicago to New York, New York to Boston and then on to Canada. He will see a very wide variety of people as he travels around. He will see congressional members at virtually every stop he makes, as well as here in Washington. He will be addressing MIT while he is in Boston, so he'll be touching base with the academic community. He will be seeing civic leaders, Chinese Americans and business leaders.

His agenda tomorrow with the President is very full, as Jim Steinberg just laid out. This is an official visit, so we begin with a reception on the South Lawn. From there we go to a welcoming ceremony on the South Lawn; from there to a brief reception. Then the two men sit down for their bilateral meetings that will cover the full array of issues that Jim just laid out for you.

There will be a lunch hosted by Secretary of Albright at the State Department, after which there will be a joint press conference, and then tomorrow night an official dinner.

On Friday, as Jim mentioned, the Vice President will cohost with the Premier a forum on the environment and development. This is actually the second forum on that topic in a series that the two leaders have developed. The first one occurred in 1994.

Let me mention, finally -- since Jim reviewed the basic agenda for you, I don't want to repeat what he said -- this is only the second time these two men have met. Last year there was a lunch meeting in Beijing during the summit. That was a large meeting. And so the two had an opportunity to go through a number of issues, but they really have not, I believe, had a chance to get to know each other. And this meeting will certainly provide ample opportunity for them to take each other's measure, to understand each other's perspectives, and hopefully, therefore, to build a basis for further progress in this important relationship.

One of the key components of this meeting will be economic and trade issues, and let me turn it over to Lael Brainard to brief you on those.

MS. BRAINARD: Thanks, Ken. Jim and I were just laughing -- I think this will be the first meeting where they can actually hear each other, since the last meeting the audio was all screwed up. Let me talk a little bit about -- sorry?

Q: How do you know?

MS. BRAINARD: We were there.

Let me talk a little bit about the full range of economic issues, and then I'll talk a little bit about the WTO negotiations at the end. But the agenda on the economics front is multidimensional. As Jim and Ken have mentioned, Zhu is really the principal architect of China's reforms, and since our economic interests in China are really multidimensional, the President will want to engage with Zhu on the full range of issues.

In particular, there is an enormous reform challenge facing China's leadership. The growth prospects for the next year are more favorable than for many Asian economies, but there are concerns in the outlook. Internally, China faces challenges associated with an enormous restructuring task, trying to restructure the state-owned enterprises and to create more room for the dynamic private sector.

Externally, the strength of the recovery of Asian crisis countries and Japan will continue to have a major impact on China's prospects. Premier Zhu clearly recognizes the importance of the fundamental reform agenda for China. He has been very focused on it, and the need to address the restructuring of state-owned enterprises, the banking system, and I'm sure that the President will want to talk a lot with him about those issues. Premier Zhu will also discuss these issues in a meeting on Friday morning with Secretary Rubin and Fed Chairman Greenspan.

The second area that we will be advancing when Zhu is here is our cooperative reform agenda. We have a host of initiatives that create commercial opportunities for our firms even as they help to advance the reform agenda in China. Secretary Daley signed an agreement with China, for instance, when he was there last week which will further advance their desires to develop a private housing market and will create opportunities for our companies as we introduce energy-efficient housing, new housing technologies, and also work on the creation of what is now a very incipient private mortgage system.

Last week here in Washington, Secretary Herman and her Chinese counterpart, Minister Jiang established for the first time a U.S.-China labor dialogue where they talked about things like employment creation policies, which is a major, major challenge for Zhu, labor market training, social security which, again, is a huge challenge, trying to delink that from the state-owned enterprises, and on our side the importance of fundamental labor rights that are recognized by the ILO.

In addition, Secretary Daley initialed an agreement for an Ex-Im financing line of $100 million that will help to support clean energy projects in China, which serves both our environmental and our energy goals.

On the commercial engagement front, there will be any number of additional breakthroughs. Tomorrow, in particular, we will sign a civil aviation agreement between China and the United States that will double passenger and cargo flights between our countries, allow an additional U.S. airline to enter the Chinese market and enable more U.S. cities to have direct air service to China. That obviously serves a whole variety for goals for us -- it will mean new jobs and millions of dollars for a variety of local communities. That's something that has really been spearheaded by Secretary Albright and Secretary Slater, as well as lots of support from Congressman Oberstar.

Q: Which airline?

MS. BRAINARD: The airline designation process is actually one that takes place in an independent regulatory process that is conducted by the Department of Transportation and the timing on that will be a little bit longer-term.

On the telecommunications side, Secretary Daley and his counterpart signed an agreement for the first time to allow foreign commercial deployment of the CDMA technology, CDMA wireless technology, the co-division multiple access. This is a U.S. technology, as many of you know. This is a very, very significant achievement for our companies.

AT&T has been successful for the first time in concluding a cooperative agreement with Shung-hi (phonetic) Telecom Authorities to jointly deliver value-added services. Again, this is a first.

And, finally, the State Planning Commission will, following years of negotiation, issue a directive to ensure all Chinese government agencies use only legal computer software. And as you know, this has been a real problem for our software industry. The PC market there is enormous, the fifth largest in the world. And if we have legal protections it will then become a large software market, as well.

Finally, the WTO. This year really represents a pivotal opportunity for China to move forward on opening its markets. That is in their interests for a variety of reasons that I think there is new recognition of in China. In particular, this coincides with their reform agenda. In addition, this is the last year for China's entry before the beginning of the new century, the beginning of a whole new round of negotiations and they're very cognizant of that.

Negotiations on this important issue have been underway for over 13 years, as the President said this morning. We were, frankly, disappointed last summer that we were unable to move further on this issue. At that juncture we were unable to accept a deal because China wasn't prepared to make the difficult decisions.

Premiere Zhu's visit and the launch of the new global round present another opportunity, perhaps the best for several years for China. We support China's membership in the WTO; we have for a long time, but we have been very clear that accession must take place on commercially meaningful terms and that there are no artificial deadlines for accomplishing that.

What is important I think to recognize in terms of what does it mean to be commercially meaningful, China already has effective access into the U.S. market, and what this deal, what this negotiation is about is creating comparable access into China's market, as well as assuring that China plays by the rules of the game in its exports, as well as the way it takes in imports. And so we will continue with the negotiations. If China is ready to play by the rules -- and we have been very clear what the rules that we are seeking, the market access guarantees that we're seeking -- as the President said this morning, we believe it would be a mistake not to take them up on it.

Thank you.

Q: Jim, why did you not mention Kosovo and the disagreement with China over the policy there? And why did the United States object to China taking over the Belgrade embassy functions here?

MR. STEINBERG: I should probably say before I get up here that the general rule when you say what the two are going to talk about is "expressio unis" does not "exclusio alterus," and I am confident that they are going to talk about Kosovo. I'm sure the President will want to explain to the Premier why we're doing what we're doing and why it's so important for stability and security in Europe. And as you know, this question has been asked of the Premier; he's obviously given some thought to this, too. So I'm confident that they are going to have a discussion on this. As members of the Security Council, they'll want to talk about it in that context as well.

I think that in terms of why we thought it was not a good idea for China to be the protecting powers, the normal practices for a neutral party who has no role or view in a conflict to play the role of a protecting power. And we suggested the Chinese, that given the fact that they had been outspoken on this issue, plus in light of their role on the Security Council, that a more appropriate country which had less particular involvement in the question would be a better choice as a protecting power.

Q: Do their disagreements cast any kind of pall over the meeting?

MR. STEINBERG: On Kosovo?

Q: On Kosovo.

MR. STEINBERG: I don't think so. I mean, I think it is obviously an issue that they have a difference on. I think it is one in which they can certainly discuss. I think it is important that the Chinese understand why NATO is doing what it's doing. I think it is really an opportunity for the President to go through this for him to deal with -- so he can understand better what our perspective is on it.

Q: Is the President receiving conflicting advice on China's entry in the WTO? There were stories that some people wanted, thought it was strategically important to conclude a deal now. Others thought it was economically important to hold out for exactly the right terms.

MS. BRAINARD: The administration is unified in its desire for China to accede to the WTON in commercially meaningful terms. And there is a set of rules, a set of market access commitments in areas like agriculture, like industrial products, in services, that we've made very clear to China must be part of what we consider to be a commercially meaningful package. And negotiations continue towards that end.

Q: Where are we on the negotiations? Supposedly, they weren't going to continue until last night. The Chinese are saying, we're very close. We're saying, maybe we're not so close. Why the discrepancy and what are the remaining differences?

MS. BRAINARD: The negotiations are continuing at this time. Lung Yung To (phonetic) has been here since Sunday afternoon and negotiations have continued throughout this juncture. They went until about midnight last night. There are actually a whole variety of issues that continue. The general sort of pace of the negotiations tend to be that the team concentrates on one issue at a time, and then they sort of go back to their own side and try to figure out whether or not in fact they have authority to move forward, so it's actually a very time-consuming process.

Just let me kind of remind you the scope of the negotiations is enormous. This is like a round in terms of every single has to be completed before any of the issues are truly completed, and so, for instance, there are some 5,000 tariff lines that need to be negotiated. There are a whole variety of pieces -- non-tariff trade barriers, licensing, tendering, quotas, investments, standards. There's safeguards. The whole range of issues is really quite enormous, and each one of them takes a lot of time.

So there are outstanding issues in all of the baskets, and the question about whether we get them all done I think is still an open one.

Q: Are both sides making --

Q: How would you characterize where you stand right now?

MS. BRAINARD: The discussions have been good, we continue to move forward. We're trying to narrow differences, but we're not there.

Q: Are both sides making compromises as you move along? Is it a matter of China coming over to the U.S. views, or the other way around?

MS. BRAINARD: I think the way I would characterize it is that we are narrowing our differences. The one thing I would remind you, that this agreement is really about access into China's market and China's commitment to play by the rules. These are commitments that China must make.

The U.S. has already entered the WTO and has made the whole variety of commitments that are necessary to be in the WTO. So this is all about China's rules, China's commitments.

Q: Are you ruling out the possibility of some kind of a framework agreement where you lock in the things you largely agree on and set a timetable to negotiate the rest?

MS. BRAINARD: I wouldn't want to rule out anything at this juncture. I think what we've been very clear about is we don't have anything until we've got everything in terms of an agreement. But we would like to move forward on as many issues as possible and narrow the differences as much as possible. And in fact, if China comes forward and meets all of the issues we put on the table, we are ready to say yes.

Q: I didn't see the word "strategic partnership" in the speech. Maybe the President gave it as delivered -- I didn't hear him actually deliver it, but is that a significant omission?

MR. LIEBERTHAL: No, it's not. I, frankly, did not notice that it was not in the speech, but we are looking -- what the President focused on in his speech was what China's future will be like and what America's interests are in that future. If we end up in the 21st century with a China that is successful in coping with the problems that confront it, and that acts internationally in a constructive fashion, able to deal cooperatively with us and with the other countries of the world, then we will have what will be termed a constructive strategic partnership with China, which is to say we'd have another active, constructive member of the international arena with whom we can deal effectively on the major issues that confront that arena.

So if he omitted that term, don't take that as a significant omission. That's what the whole speech was really about.

Q: Jim, another question about the speech. The President mentioned his warning about a campaign-driven Cold War on China. What motivated him to decide to sort of referee the upcoming campaign on the China issue, and how does it square with what he said about President Bush's China policy during the '92 campaign?

MR. STEINBERG: I think the President thinks it's very important for everybody involved in this process to focus on our long-term interest. I think there is obviously a legitimate debate along the full range of policies having to do with China, but the important thing is to have a substantive debate to look at what our national interests are, what is the best way to pursue them.

He's obviously persuaded that our strategy of engaging with China and trying to bring it into the international community, while speaking candidly about our differences, is the best way to promote national interest. And I think he would welcome a debate about that as long as there is a focus on national interest and it is done in a way that really focuses on what the American people need to hear about what we are trying to achieve and how we're trying to achieve it.

Q: And again, how does it square with the tact that he took in '92 when he accused Bush of coddling the Chinese?

MR. STEINBERG: I think the President -- again, I said -- would welcome a substantive discussion about the policies, and that is what we are discussing here. And I think he sees that as part of it. But he thinks that it should be done in terms of what our national interests are.

Q: Given that both sides have said there has been progress, and I think it would be fair to say substantial progress, and given the fact that relations with Russia are in a deep freeze -- we're at war in Europe -- can the U.S. afford to send him back empty-handed?

MR. STEINBERG: I think Lael said, we seek a good agreement; if we can get a good agreement we will have a good agreement. But again, it's a question of meeting what we believe is necessary to advance U.S. economic interests. I don't think you do -- we're not doing an agreement for the sake of doing an agreement. We will do an agreement if it's in our interest to do one.

Q: Zhu's human rights record has deteriorated since the President was there. You've complained about a number of arrests. What impact does that have on U.S.-China relations?

MR. STEINBERG: I think, first of all, as you know, the United States decided to sponsor a resolution in Geneva this year. And I think it's a reflection of the fact that we have said that when it's appropriate and necessary, we will do that; most importantly because we want to be clear and candid about our concerns and to be forthright about our perspective on these things. I think that, clearly, progress on human rights can strengthen the relationship between our two countries. It is important to Americans, it's an important part of our foreign policy and it's an important part of what we believe is necessary for China to be a successful nation.

So I think that, clearly, when there is progress in human rights, it strengthens the relationship. When there isn't, it's something that we need to continue to discuss and to work with them to see how we can encourage them to move down that path.

Q: If it strengthens it when there's progress, how does it hurt it when they're backsliding?

MR. STEINBERG: Again, I think that what we feel is that we will have a fuller, richer, stronger relationship the more we can see that what they're doing, both for their own sake and for the sake of their people, reflects those kinds of values, which they, themselves, have said that they embrace. I mean, one of the reasons why we did not sponsor a resolution last year is because they were moving forward on the international covenant on civil and political rights. We would like to see them actually begin in word and deed to implement that.

It's no accident that we have stronger, deeper relationships with other democratic countries than we do with countries that don't have those values. It doesn't mean that we can't do important things together when our interests are in common, but the strongest relationships we have are with our democratic friends and allies.

Q: Is there a price to pay?

MR. STEINBERG: What I'm saying is, it is a different character of relationship. It's not a question of exacting a price, it's a question of countries that are strongest in their relationship when they have the same values and are pursuing the same interests.

Q: Along the same lines, Jim, regarding Los Alamos and espionage, it doesn't seem the Chinese have paid much of a price for stealing our nuclear secrets. Is that going to be on the agenda?

MR. STEINBERG: First of all, the full range of issues will be on the agenda. But let me say, I don't want to comment specifically -- there are a lot of allegations, there are a number of investigations underway. We will continue to pursue those investigations. We take very seriously the safeguarding of our sensitive information and technology.

Q: Will they specifically discuss --

Q: Could you or one of your colleagues talk us through what the WTO agreement, if it was reached, would require Congress to do. And specifically, if Congress failed to change Jackson-Vanik or, in some way, to make permanent MFN or normal trading status, would that put the U.S. in violation of its own WTO?

MS. BRAINARD: First of all, let me just say that we see, have seen, will continue to see Congress as a full partner in this effort. There have been massive consultations over this issues, stretching back six years and more intensively over the last two months as the negotiations have picked up pace. And Congress will continue to play a very important role as a partner in this effort.

With respect to the WTO accession process, following bilateral agreements between China a whole variety of its trading partners -- among them, ourselves -- then there is a multilateral process that takes place in Geneva, where the agreement is reconciled. And that process takes place governing China's accession to the WTO.

In terms of our own legal requirements, the U.S. cannot apply the WTO agreement to govern bilateral trade relations unless Congress graduates China from Jackson-Vanik. So, in fact, that is what you're referring to. That applies to our bilateral trade relations, it does not govern multilateral trade relations for China. But it does govern how we treat each other.

Q: Just so that I understand, if it did not pass for some reason, other nations, then, would have the benefit of all of the WTO commitments that China has made -- lowering tariffs, opening markets -- but the U.S. would not, unless it had actually changed Jackson-Vanik?

MS. BRAINARD: If China had acceded to the WTO at that juncture, each individual country's trade relations with China would be governed by their own individual laws. And so in cases where, in fact, they recognize the WTO accession it would govern their trade relationship. In our case, until China graduates from Jackson-Vanik, it would not govern our bilateral trade relations.

Q: Back on Los Alamos, would you expect the spy issue to be on the agenda tomorrow? Should we expect the President to raise this issue with Premier Zhu?

MR. STEINBERG: I think, again, without getting into specifics, I would expect the President is going to discuss the full range of issues, which includes national security concerns that we have.

Q: But, Jim, you outlined quite specifically for us drugs and crime, Korean Peninsula. I mean, you went through some specific issues that would come up, but you won't say that this one will.

MR. STEINBERG: I will go back to what I said before. The fact that I identified some does not mean that it excludes others. There are a number of other issues that are going to come up and you'll probably ask me and I'll probably tell you that we're going to cover the full range of issues.

Q: Are you suggesting we don't believe that it's not clear to us yet whether the Chinese stole our secrets?

MR. STEINBERG: I am not going to comment on ongoing investigations.

Q: Will the President confront the Premier on the issue of Chinese money having gone to the Clinton-Gore campaign?

MR. STEINBERG: I didn't have to wait too long. (Laughter.) Again, this is a subject of an ongoing investigation. I'm not going to comment, edit or confirm or deny any of the reports. These are matters that are being looked at by the Justice Department. But as we have in the past made clear to the Chinese at the highest levels, including in the President's meetings, that we expect full cooperation by Chinese authorities with any investigations that are ongoing. And I would expect the President would reiterate that position.

Q: Are you getting it? Are you getting full cooperation?

MR. STEINBERG: I think you should ask the Justice Department, because I wouldn't want to judge for them whether they feel they're getting the cooperation.

Q: The President was very explicit today in talking about how seriously he has taken these national security concerns, and he detailed what the U.S. has done, so why wouldn't you all want to make it clear whether this particular issue would be raised tomorrow?

MR. STEINBERG: I'm confident that the range of issues having to do with sensitive technology, and the like, are there. What I don't want to suggest is -- there have been a number of reports. I don't want to confirm or deny the specifics, and whether you ask me whether a specific matter is going to be raised -- some of these things are allegations, some of the things are appropriate in specificity for the President to raise, or not raise. But the subject matters that you're discussing, full range of subjects, will be discussed.

MR. LEAVY: Okay, last question.

Q: Jim, last year the President made quite clear that he was upset that he hadn't been briefed in greater detail on the status of the Justice Department's investigation into the China campaign finance situation. Has he been briefed, or will he be briefed, on that issue this time, before he goes into the meetings? And can you give us any details of at least the nature of the briefing, or whether there is contact between the White House and Justice on that issue?

MR. STEINBERG: I can only talk to you about the national security part, because that's obviously the part of the portfolio for which we're responsible. And we have a process with the Justice Department, with respect to those matters which affect national security matters or conduct of foreign relations, and in connection with that we are in regular contact with the Justice Department and are briefed.

Q: Does that mean the President has been briefed on those issues?

MR. STEINBERG: On the matters within our responsibility, yes. I mean, other people have responsibility for other matters.

Q: Jim, briefly on Kosovo. Can you give us the administration's view on what seems to be a Milosevic strategy of essentially declaring victory, moving refugees back into Kosovo, withdrawing his troops? What do you make of it? And what's the administration's response to this latest development?

MR. STEINBERG: Well, obviously, Milosevic wants us to stop the air campaign. And we've made clear to him what he needs to do if he wants to have it stopped. It's not enough for him to do some things that he wanted to accomplish and then try to blunt the campaign by saying, well, I'm going to stop the fighting now, on my terms.

He needs to let the refugees come back. He needs to let them have security when they come back by the presence of an international security force. He needs to make sure that there is a democratic, multiethnic Kosovo. And that's why we are not -- and there is not dissonance at all in the Alliance about this -- suspending the bombing campaign.

THE PRESS: Thank you.

END 1:24 P.M. EDT